What is the biggest risk for the seller – and buyer – in a seller carry back sale? Here is what Motley Fool has to say:
“The most substantial risk for the seller is the buyer not repaying the loan as agreed. There is no way to guarantee a buyer can pay or will continue to pay. But there are measures that reduce the possibility. For example:
- A seller might review a borrower’s credit score and credit history.
- A seller may look at the buyer’s payment history on other accounts.
- A seller may identify outstanding debts that could jeopardize the borrower’s ability to pay.
- A seller could confirm that the borrower’s income would cover their monthly expenses with the new payment.
- Getting a larger down payment may help mitigate the risk.
The most considerable risk a buyer has is the seller’s process for record keeping. Some seller’s might record by hand or pay a third-party servicing company to keep payment records. Buyers should keep a record of each payment made over the life of the loan so payments and the remaining balance due can be verified in the event an issue arises.”
www.fool.com/millionacres/articles. What is Owner Financing by Liz Brumer-Smith, Contributor.
